The ups and downs of asset prices on any given day are being determined, more and more, by the words and actions of three men.
First, of course, is Donald Trump, who has rediscovered his power to send markets soaring—or into a tailspin—with less than 280 characters on Twitter. Then there’s U.S. Federal Reserve Chairman Jerome Powell, who repeatedly finds himself on the receiving end of nasty Trump tweets for abiding by his mandate to do what’s best for the U.S. economy, which isn’t necessarily always the same thing as what’s best for the sitting president. And in Beijing, it’s Xi Jinping, the president of China who sits atop a Communist Party in which politicians and central bankers famously sing from the same hymnal, at least when the audience is outside observers.
The financial markets have been like a mosh pit where these three players bang against one another. Powell, under pressure from Trump to cut interest rates aggressively, sent markets reeling by signaling the central bank’s rate cut last month was a “mid-cycle adjustment” and not the start of an aggressive loosening of monetary policy. The very next day, Aug. 1, Trump exacerbated the sell-offby saying he would place tariffs on practically any U.S. imports from China that don’t already have them, starting in September. The response from Beijing on Aug. 5 caused the biggest waves in global markets, as the People’s Bank of China all